Blog: Ideas and Living

The Net Neutrality hype has started up again. I find that many of my friends are propagating a lot of poorly-informed fear, uncertainty, and doubt about the changes. They compare it to cable offerings and packages with exclusives. They claim that throttling will make certain services unusable like HOT-lanes that you can only use based on the type of car that you buy.

It's easy to latch onto fear and to make great claims about censorship and access.

The Argument From Property Rights

There is a bitter irony involved with discussion of Net Neutrality.

These entities, Internet Service Providers, have made great investments into something. They developed it and found new ways to deliver it with greater speed and less cost year over year. And it has become so important they cannot be trusted to do as they please with it. By virtue of creating something valuable, ISPs like medical care providers, must submit to heavy government regulations under Title II.

People who are used to a conservative viewpoint will note that there is a violation of property rights occurring with Net Neutrality. The networks which comprise the internet are private, run on equipment owned by a non-public entity. Under a system of laissez-faire capitalism, the government shouldn't properly interfere with the way property is used unless it is used to violate someone else's life or property.

The Rational Counter-Argument: Telecom's History Of Government Entanglement

On the other hand, the powers that be in Internet and Mobile data services has always been subject to government franchises and licensing. They are not capitalist entities forged in a free market. The system that exists today didn't arise from natural selection given open competition. AT&T was forged into a monopoly by a comple of government-policies.

In 1918 the federal government nationalized the entire telecommunications industry, with national security as the stated intent.

One of the hardest things to do well is to grow a competitive environment after the government has worked to systematically destroy competition for a long time. So it's understandable to want to maintain government control since the entities which exist after deregulation are unnaturally large and wield large amounts of anti-competitive power.

It's also understandable that people who might be competitors would be wary of entering a field where they might face stifling resistance from government regulators with unclear limits on their powers.

Competition will ensure good practices, the free-marketeers argue, but we are prevented from strong competition by the history of the situation and innate resource limits so we have to regulate.

Net Neutrality and Title II are Not The Same Thing

I see the arguments on both sides. And I disagree with using Title II common carrier status for ISPs. Thus I am in favor of the current action by the FCC to roll back the 2015 changes.

I am a network engineer by trade and a proponent of individual-rights. So I can see the arguments of property rights AND the complexities of transitioning from government-enforced monopolies toward a free market.

I believe open competition is the best protection against corporate bad actors. And, thus, a low regulatory bar to allow for new competition should be pursued by government policy.

I am a proponent of Net Neutrality by voluntary agreement. This is something that should be decided in the IETF. Not by government edict. Yes, the internet is a medium that works best when anyone can access anything. But I don't trust a government given broad powers under an act of Congress created in 1934 to deregulate a monopoly that they created.

Net Neutrality Without Hysteria

I present to you a survey of articles I read this morning. Some of them are about preferential treatment of traffic. Others focus on privacy. It's a really complex field of issues and I encourage you to take it in without reacting right away.

Some of these are from 2014/2015. Others are more recent. And all will present a perspective that the more fearful among us are not sharing.

"Title II was included in the original Telecommunications Act of 1934 to address potential problems created by having one company, the “old” AT&T, being the monopoly provider of “telecommunications services” which atthe time and for much of the rest of the century meant services provided by the “public switched telephone network.”

Title II authorized the FCC to regulate the price of telephone services provided across state lines, or long-distance calls (while individual states regulated prices of “local” calls within states). Later, after the old AT&T was split up following years of antitrust litigation, and as some competition developed in telephone services, the FCC used Title II, as amended by the Telecommunications Act of 1996, to prohibit the pieces of the old AT&T (the regional “Bell Operating Companies” or “RBOCs”) from discriminating against companies wanting access to the network, while overseeing the systems that were developed for payment of traf c origination and termination."

"Following the guidance of Cellco, the court signaled it would tolerate a case-by-case regime that grants room for “individualized bargaining” by the parties to a paid priority arrangement. (Alas, the FCC rejected this approach in its 2015 Open Internet Order.)

Such deals, if done in a discriminatory manner, could be challenged ex post by third parties or by the FCC, but—and this is key—the burden of proof would fall on the challenger. In particular, the paid priority arrangement would be presumed not to violate the non-discrimination standard, and the challenger would have to overcome that presumption.

"By returning to light-touch regulation of broadband service, the Commission will give Muni ISPs incentives to invest in enhancing our networks and our deployment of innovative services at affordable prices while still ensuring consumers have unfettered access to the Internet," they wrote.

The substantive issues in net neutrality have to do with what services broadband internet providers are allowed to offer customers. There are legitimate concerns that these companies might give their own content fast-lane priority over rivals’ content, allow free delivery (also known as zero-rating, the practice of not counting certain types of content

toward data usage limits) only for favored content providers, and block consumers from accessing legitimate websites.But in many instances, fast lanes, zero-rating, and the like benefit customers. In separate research, both former FCC Chief Economist Michael Katz (with Ben Hermalin) and I (with Janice Hauge) showed that fast lanes benefit small content providers in their attempts to compete with established industry leaders. AEI scholar Roslyn Layton has shown that elderly and low-income consumers benefit from zero-rating services.

By adopting Title II regulations, the previous FCC outlawed all such activities.